6th Circuit sides with Sault Tribe in commercial casino dispute

The Greektown Casino in Michigan. Photo from Mike Klein / Instagram

The Sault Ste. Marie Tribe of Chippewa Indians doesn't have to pay $74 million to former investors in its commercial casino in Detroit, Michigan, the 6th Circuit Court of Appeals ruled on Friday.

The tribe was the majority owner of the Greektown Casino. A 2000 agreement required $265 million to be paid to former investors over a certain period of time.

The tribe paid $191 million before declaring bankruptcy at the casino in 2008. The investors went to court to seek the remaining $74 million, plus interest, but the 6th Circuit ruled that the agreement doesn't require full payment because "certain thresholds" in revenue from Greektown were never reached.

The tribe and the authority did not receive payments from Greektown Casino in excess of the thresholds specified in paragraph 3 of the guaranty agreement," the decision wrote, referring to the tribe and Kewadin Casinos Gaming Authority, the tribe's regulatory body. "Consequently, the obligation of the tribe and the authority to pay under the guaranty agreement was never triggered."

Additionally, the court said the investors tried to modify provisions related to those thresholds without the tribe's consent. Such "unilateral action" is not allowed by the agreement, the 6th Circuit concluded.

"The tribe and the authority must consent in writing to any modification of the guaranty agreement," the 2-1 decision stated. "The tribe and the authority did not consent in writing to eliminate paragraph 3 from the guaranty agreement, which included the critical conditions precedent to their obligation to pay in the event of Kewadin’s default."

After going through bankruptcy proceedings, the tribe received approval to transfer ownership of Greektown in June 2010. The facility continues to operate under new ownership.

Turtle Talk has posted documents from the case, Gatzaros v. Sault Ste. Marie Tribe of Chippewa Indians.

6th Circuit Opinion:
Gatzaros v. Sault Ste. Marie Tribe of Chippewa Indians (August 1, 2014)

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